It’s been a rough experience for the crypto market in 2022. By November the market was down by more than 70 percent from its previous high in November 2021. When things were looking down, the FTX crash turned things more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of drops in the past. Each time, it’s bounced back by a massive rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. But, in 2017, it broke that record, and hit a new record high of $19,600. Then, in 2018, and it was trading at $3,100. In 2020, it broke through that resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve had another dip. However, history has shown us that at the end of every dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips are usually followed by a long bull run, which eventually overcomes the resistance set by the previous high price. This pattern can be seen in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in the last few years. With more and more businesses and industries adopting it, its usage and acceptance is growing. From finance to gaming cryptocurrency is being utilized in a myriad of ways. The growing popularity of crypto can lead to increasing participation in the market, which in turn could boost prices.
The rise in interest of institutions in cryptocurrency
In recent times we’ve noticed a growing interest from institutional investors in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the potential for crypto-based assets. The increasing interest from institutions could provide more stability to the crypto market and lead to higher prices.
Government regulations
As the crypto market grows as it matures, governments all over the world are beginning to develop more favorable regulations for crypto. This could help attract more investors and boost the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, blockchain is a broad range of possible applications beyond the realm of financial transactions. From supply chain management to voting systems, more industries are starting to explore how they can utilize blockchain technology. This could increase investment and enthusiasm in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are still in the beginning stages of development. As progress is made in areas such as scalability and security, the potential of crypto assets will continue to grow. This could result in more use and increase in prices.
Rising global economic uncertainty
Due to the constant economic uncertainty brought on by the COVID-19 pandemic and other factors increasing numbers of investors are beginning to look for safe haven assets like bitcoin and even gold. As the global economic situation remains uncertain and uncertain, this could lead to an increase in demand for crypto and higher prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in crypto. Retail investors, also known as individual investors are also beginning to participate in the market for crypto. As more and more people become aware of crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the market for crypto is maturing, more and more people are beginning to become aware about and appreciate it. As awareness and acceptance grows of crypto, this could lead to more people purchasing as well as holding the crypto that can increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services developed on top of blockchain technology. As DeFi continues to grow and more platforms and projects come online, this could result in increased use and increased prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows as more and more businesses are starting using crypto to be a method of payment. This could result in increased use of crypto in everyday transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned investment vehicles, are beginning to look at cryptocurrency as a possible asset class. As more funds allocate a portion of their portfolio to crypto, it could increase demand and more expensive prices.
Utilization of crypto to make international payments
One of the biggest benefits of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions, this could lead to increased demand and higher prices.
An increasing number of crypto ATM’s
As the number of crypto ATM’s continue to grow, it will become easier for consumers to purchase and store crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership in an asset such as stock or real estate are rapidly expanding sector of the crypto market. As more security tokens are created and traded, it could lead to increased demand and consequently higher prices for crypto.
More adoption by merchants
As more and more businesses accept crypto as a means of payment, it will make it easier for people to utilize and store crypto, which can boost demand and increase prices.
Will crypto be on the increase in 2023? Only time will tell. With these things being considered, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. If you’re looking to invest for the long run, being patient and disciplined is essential.